The Top 10 Most Innovative Companies in the U.K.

For advancing everyday tools to the point of perfection. Engineer James Dyson's bagless vacuums and bladeless fans have made innovation a household word in the U.K. Today, 85% of Dyson machines are sold to global markets, up from 30% in 2007. The company invests more than $2 million weekly in research and development, yielding such products as the recent Airblade Tap: a 10-second digital, motor-powered water faucet that both washes and dries (using 450-mph wind).

For plunging into the always-on feature future. Shazam is like Pop Up Video for everyday life: Press a button and the app IDs any song, TV show, movie, or ad you hear. Its CEO, Rich Riley, believes we've reached a new smartphone era: "The world is going to an always-on state for apps," he says. In December, Shazam showed what that looks like with Auto Shazam, an opt-in feature that quietly keeps a diary of your day's playlist for you. In its first month, Auto Shazam logged 1 million daily recognitions. With 350 million users worldwide—and with the company adding 10 million more per month—there's plenty of room to grow. Read more >>

For creating entertainment for a new generation. Winning the hearts of 80 million children, Mind Candy's online phenomenon Moshi Monsters allows kids to adopt their own virtual pet. The franchise now includes books, magazines, TV shows, and toys, all of which fuel its $45 million in revenue. Founder Michael Acton Smith, who recently launched an innovation center called Candy Labs, uses the online space as a testing ground to build strong, character-based games and apps before taking the products offline. The company's first animated film, Moshi Monsters: The Movie, hit U.K. and Ireland theaters in December with the help of production partner Universal Studios.

For putting the smarts in 95% of the world's smart devices. The Cambridge-based ARM designs low-energy, high-performance microprocessors that are embedded in most of our smartphones and tablets. Its 64-bit chips power the hit iPhone 5s, and ARM is now ramping up semiconductor production for the surging market for the Internet of Things. That means the company—which will now have thermostats, fridges, and washing machines to toy with—will expand its reach further into our daily (digital) lives.

For validating the streaming-music business by putting artists first. Headquartered in London and Stockholm, Spotify's quest to stabilize the still-shaky music industry is paying off, both for artists and for the company. Thanks in part to new features that make it easier for listeners to discover music (and concerts), Spotify has grown to nearly 26 million active users—6 million of whom pay $10 for ad-free access. The company claims to pay out nearly 70% of its revenue in royalties (nearly $500 million in 2013), which has drawn skepticism to its business model. Spotify, however, has been partly credited with lifting music revenues in Sweden by 5%, and earlier this year, it was able to drop its time limit for free web listening—proof that its formula is working. Even the mighty Apple is chasing Spotify's success with the monochrome iTunes Radio.

For fashioning a tech revolution in traditional British retailing. With annual sales of more than $3 billion, the 1856 luxury brand is an object lesson in leveraging digital media, with live-streamed runway shows and whimsical online marketing initiatives like Burberry Kisses, plus a high-tech Regent Street Burberry flagship that brings its online trench coat customization site to life. The company credits digital investment and online sales for a 14% uptick in revenue at the end of last year.

For achieving groundbreaking design in one of the world's oldest cities. Thomas Heatherwick has been likened to a modern-day Leonardo da Vinci: His London-based design practice, Heatherwick Studio, employs 110 architects, industrial designers, and model makers. The studio's recent projects include the 2012 Olympic cauldron, a revamped double-decker bus, a Bombay Sapphire gin distillery, and plans for a pedestrian Garden Bridge across the River Thames, replete with wildflowers, grass, and trees.

For hacking together a $25 credit card–size programmable computer. The Raspberry Pi computer came out of the University of Cambridge to help teach the world's kids to program with a tiny, accessible machine that plugs into a TV and keyboard. Now a registered charity, Raspberry Pi allows anyone to build and prototype new products quickly and cheaply. Scrappy Raspberry Pi–enabled programmers have already used the technology to build everything from baby monitors to weather stations and robots.

For inventing quirky, cloud-powered products. London-based design consultancy Berg is responsible for whimsical gadgets like the Little Printer, which prints out a custom newspaper from web-sourced content, and a recent prototype of a tweet-powered cuckoo clock (in collaboration with Twitter UK, of course). The company recently partnered with Treviso, Italy–based Fabrica to launch Sandbox, a collaborative research and development program. Based on the company's Cloud platform, the initiative aims to help academics and businesses create products and services for the Internet of Things.

For pruning its sprawling stores into greener, leaner machines. Marks & Spencer has taken a systemic approach to sustainability, resulting in a 23% decrease in CO2 emissions since 2007, zero waste to landfill, and carbon-neutral stores, warehouses, offices, and delivery fleets in the UK. With web and mobile sales up nearly 17%, the $15 billion traditional British retailer is refocusing its resources on building an international multichannel brand with a popular new mobile app and a London-based digital lab.